The good news — it’s full of interesting cost estimates and
projected subscriber take rates based on specific demographics in Pittsburgh,
Minneapolis and Philadelphia. The paper also examines a range of business
models, in detail, from complete monopoly to structural separation
(wholesale–retail) to let-the-market-take-care-of-it.

The bad news — all of the models turn out to be extremely
sensitive to revenue assumptions, i.e. to the estimates of subscriber adoption
and willingness to pay.

The flaws in this study

All of the models compute a net present value based on five years of stable
operations, but there is no mention of technology evolution or adoption rates of
competing broadband services, i.e. cable and telco (DSL or FiOS) services since
this is a US study. Technology is evolving at a great rate. You can’t bet on
stability.

During the past five years we saw WiFi go from 11 Mbps to widely deployed 54
Mbps systems and bleeding edge (pre-standard 802.11n gear) systems doing well
over 100 Mbps. The last five years also saw costs decline to the point where
we see widespread deployment of WiFi by individual consumers, a significant
percentage of which are running open WiFi hotspots.

On a recent drive through three different neighborhoods in Portland Maine, I
was interested in looking up real estate information on the web. On each of a
half dozen occasions, I was able to find a open WiFi hotspot within one city
block of deciding I wanted to connect. In January, I was in north New Hampshire
and spent two nights at small motel (not part of any chain) in Littleton, NH.
They had no Internet on offer, but a quick check for WiFi signals revealed two
within range of our room. If you don’t like my anecdotal information, look at
the WiFi hotspots that have been mapped by Navizon. It’s very different than five years
ago.

No matter how much it simplifies the analysis, you can’t bet on
stability.

What might happen with WiFi in the next five years? The latest WiFi
specifications add multiple input, multiple output (MIMO) support,
additional modulations and other goodies. As low cost WiFi routers incorporate
these advances we’ll see speeds go over 300 Mbps, but more importantly MIMO
technology increases both range and directionality. This means overlapping
systems work better (despite their overlap) and the signals from isolated
systems reach further.

If you’re worried today’s open systems will be locked down, then spend your
time thinking about schemes like FON which offer more secure ways
for consumers to share WiFi bandwidth.

If you’re worried consumer solutions won’t reach the inner city, perhaps
someone needs to relook at where WiFi has already been deployed, and then
forecast what might happen over the next five years, given the cost of a basic PC is approaching that of a television and the Cable
and Telco duopolists both push triple play bundles.